Rules for Setting Up Leave Accruals: Questions to Consider
Leave accruals may not be a super-sexy topic of a blog post (or even of conversation, for that matter), but when it comes to the needs and morale of your employees, it’s an extremely important topic. Leave accrual refers to the amount of leave time employees accrue over time at a company, including sick time, holidays, vacation, and other personal time they would want to take off. If you’re reading this post, you probably know all too well what leave accruals are, and are most likely involved in making sure employees at your company have the correct amount of leave time available to them.
That’s where leave accruals can become an incredibly complex maze to try and navigate. This is because every company has its own rules governing which employees get how much leave time. Here are just a few of the factors that could affect leave time accruals:
- Different types of employees (full-time, part-time, contract, etc)
- Whether employees are salaried or hourly
- Longevity (how long an employee has been with the company)
- What country employees are in (for companies that have offices in different countries)
If you’re responsible for setting these rules up in any of your business systems (such as time tracking, HR, payroll, accounting), then I don’t envy your job. This is indeed a complex maze of rules and regulations, and setting them up properly can be tedious and headache-inducing.
Questions to Ask
As you’re going through the challenging process of setting up leave accruals, there are several questions to consider, especially when it comes to the capabilities of the system you’re using to manage leave accruals:
1. How do I create different accrual rules for different types of employees? I mentioned above that different types of employees may receive different amounts of leave time. In this case, you will need the ability to set up different rules for each different type.
2. Do we allow time to carry over from last year? Some companies have a “use it or lose it” policy for leave time, while others allow employees to carry over their time from the previous year. This is definitely a must-consider for setting up your rules.
3. Can accruals that change on an annual basis be updated automatically at year end? This is something you would ask regarding the system you’re using to set up your leave accruals. If you have the ability to set up rules that update annual accrual changes automatically, you’ll save a lot of time from doing this manually.
4. Can people accrue time off at different rates? You may have situations where different employees accrue leave time at different rates. For instance, a part-time employee may earn four hours of vacation time for every 40 hours worked, versus a full-time employee earning eight hours of vacation for every 40 hours worked. Perhaps certain employees negotiated a certain amount of time off when they were hired. You would need to set up accrual rules that take these situations into consideration.
5. Are employees allowed to exceed their time off balances? If you allow employees the flexibility to take time off they have not accrued, or go over their balance, then this needs to be set up as an accrual rule.
Is Your Current System Up to Snuff?
By going through the exercise of asking these questions, you’ll be able to evaluate your current system based on the answers and determine if it will allow you do these things. The less your system can do or automate for you, the more manual work you’ll have to do.
If your current system will end up creating more leave accrual work and headaches for you, then it may be time to look at a system that can handle all these scenarios and take work off your plate. For instance, the Journyx Accrual Calculator gives you the flexibility to create many different rules for many different situations, as well as automate certain processes that you would otherwise have to perform manually.
While leave accruals may seem mundane, they’re a pretty big deal for your employees and important to set up correctly. As a new year begins, now is a great time to think about what will make setting up your accrual rules easier in 2017.
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